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Whole Foods Continues to Slide

Aug 22 2008

Whole Foods Continues to Slide 

Whole Foods Market Inc (WFMI) finished the week with a little uptick as volume spiked at the close on Friday but the weeks chart looks similar to Freddie Mac (FRE). Of course Freddie Mac dropped 43% this week while Whole Foods only dropped 6%. But the continued slide looks similar.

Love the Stores

    I like the stores themselves although its customer base is the high end consumer which could be shrinking as consumers look for bargains at stores like Wal-Mart (WMT) or the same.

Fundamentals

    Analysts have downgraded the earnings slightly over the past 90 days from 0.28 a share down to 0.15 a share. And the company has missed their last four earnings estimates, which is never a good sign. Sales are expected to grow 22% this year while earnings take a tumble down 31% year over year.

The Trade

    There’s a lot of short interest in the stock, currently 19.7% of float. So being long the stock could provide a short squeeze if there’s any kind of positive news from the company. Yet the overall economy is not improving, inflation is staying for the time being, and Whole Foods Market is going to struggle for the foreseeable future.

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